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Homeownership in Florida offers the joy of having a place to call your own in one of the best states in the country.

Living in Florida also brings a variety of financial benefits, especially when it comes to Florida property tax and taxes in general.

For many potential homebuyers, the state's favorable tax policies can add to the appeal of owning property here, thanks to the various tax deductions and credits offered.

In this article, we’ll help new Florida homeowners navigate and maximize these tax benefits effectively.

Start your application with MIDFLORIDA Credit Union.

Florida property tax deductions

Florida's property tax system is designed to be straightforward, but understanding it can help homeowners maximize their savings.

Property taxes are assessed based on the appraised value of your home, and various deductions can lower this taxable value.

Homestead exemption

One of the most significant deductions is the Homestead Exemption—something that can reduce the taxable value of a homeowner's primary residence by up to $50,000 (for qualifying homeowners).

To claim this exemption, you must own and reside in property on January 1 and apply with your local property appraiser's office by March 1.

This exemption not only lowers your property tax but also caps the annual increase in assessed value, providing substantial long-term savings.

Mortgage interest deduction

For many Florida homeowners, the mortgage interest deduction is one of the most substantial opportunities to reduce their tax liability.

If you're paying interest on a mortgage for your primary or secondary residence, you're likely eligible to strike this expense off of your taxable income.

How the mortgage interest deduction works

To claim the mortgage interest deduction, you must itemize your deductions on your tax return rather than taking the standard deduction.

The interest paid on a mortgage, up to a limit of $750,000, is deductible. 

This deduction can be a welcome deduction on your overall tax liability, especially in the early years of your mortgage.

Energy efficiency improvements

Investing in energy efficiency improvements for your home not only contributes to environmental conservation but can also lead to tax savings.

The federal government offers tax credits for certain eco-friendly upgrades, such as solar energy systems, which include solar water heaters and solar panels.

These credits are available for both existing homes and new construction and are not limited to your primary residence.

Solar upgrades

For solar energy systems installed through the end of 2032, you can claim a tax credit for 30% of the cost of the system, including installation (less state and local credits and rebates).

To claim these credits, you'll need to file IRS Form 5695 with your tax return and keep receipts and records of your expenses.

Other deductible home expenses in Florida

Work-from-home deductions

For those who work from home, the home office deduction is a valuable opportunity to reduce taxable income.

This deduction allows remote workers to deduct a portion of their home expenses—such as utilities, internet, and mortgage interest—based on the percentage of their home used for business.

However, it's important to meet the IRS criteria for dedicated workspace and usage to qualify for this deduction.

Hurricane relief

In Florida, where natural disasters like hurricanes are more common, homeowners may also be eligible for disaster-related deductions and credits.

If your property suffers damage from a federally declared disaster, you may deduct the loss after insurance reimbursements, providing a financial buffer in difficult times.

Renovations or improvements

Additionally, significant home improvements or renovations might qualify for deductions, if made for medical reasons.

Navigating tax deductions as a Florida homeowner

Here are some tips to maximize your deductions and credits:

• Keep detailed records of all home-related expenses and improvements
• Itemize your deductions—if they exceed the standard deduction
• Be wary of overestimating deductions or claiming ineligible expenses, as this can lead to audits and penalties

Consulting with a tax professional is always recommended, especially when navigating complex deductions and ensuring compliance with the latest tax laws.

A tax professional can help identify any additional savings opportunities and avoid common pitfalls, making their expertise invaluable.

The final word on Florida property tax

Understanding and taking advantage of these tax deductions and credits can make homeownership in Florida even more beneficial.

By reducing your taxable income through property tax deductions, mortgage interest deductions, and credits for energy-efficient home improvements, you can significantly lower your overall tax burden.

As you navigate homeownership in the Sunshine State, take full advantage of the available tax benefits to enhance your financial well-being.

MIDFLORIDA: Connecting you with mortgage solutions

MIDFLORIDA knows mortgages and what it takes you get you the keys to the house you deserve.

Taking advantage of tax benefits and deductions is just one strategy to enable you to afford the home of your dreams.

Start your application with MIDFLORIDA today. Let’s learn about your homebuying goals and what we can do to make them a reality.

Further Reading Recommendations

What Every Florida First-Time Home Buyer Needs to Know

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A Comprehensive Guide to Property Taxes in Florida

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